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Southern Europe grapples with changing face of tourism -Breaking

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© Reuters. On February 26th, 2022, people visited the Parthenon Temple, located atop Acropolis Hill, Athens’s archaeological site. REUTERS/Louiza Vradi

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Karolina Tagaris

CORFU (Greece) – Dimitris Diavatis was crushed by one bill of electricity. He had high hopes for his Greek summer resort to bounce back from the pandemic. Even with thousands of bookings.

He paid more than twice what he had spent last year, when the hotel wasn’t even opened. The irony that followed two slow summers was evident to him. “We won’t be making a profit in good years,” he stated. It will be swallowed up by inflation.

Greece – like the other tourism-dependent economies on the euro zone’s Mediterranean fringe – is seeing signs of a much-needed recovery in visitor numbers in 2022 after two largely lost years. Like in Spain and Portugal, this sector contributes significantly to government revenues.

The pandemic is changing the landscape of tourism in the entire region. Inflation and higher fuel prices were already problems for hotels, which will be worsened by a new energy price rise in response to Russia’s invasion.

The dislocation of labour markets caused by COVID-19 has left entrenched staffing shortages, while Italian tourist officials concede that pandemic-era holidaying – with its emphasis on hygiene, cleanliness and space – is a big challenge for its ageing infrastructure.

According to government and industry officials, revenues in Greece will be 80-90% higher than the record of 2019, which saw 33 million tourists bring in 18 billion euros, or a fifth, of national output.

However, a boom season won’t offer any relief to businesses that have been struggling since 2018 after a decade of financial difficulties. The pandemic brought global travel to an abrupt halt in 2018, two years after they had emerged from the same financial crisis.

The problem of rising gas, electricity and gas prices is so acute that Yiannis Retsos (president of SETE), wrote in January to ministers urging them for financial assistance. He stated it was impossible for hotels year round to cover their expenses, particularly after winter.

Europe’s southern countries, which are heavily indebted, were waiting for the European Central Bank (ECB) to end the stimulus that had kept their borrowing costs low.

Despite the uncertainty in the outlook for interest rates following the Ukraine conflict, it is critical that the south fringe of the country’s tourism sector get back on track given the impact the conflict has had on the economy.

Retsos, a Greek official speaking one day after Russia’s invasion declared that it was not too soon to assess the impact of the operation on the tourist sector.

Over a week after the conflict began, cancellations have not increased in the entire region.

Russian tourists are only small part of the southern Europe tourism industry. They account for around 2% in Greece’s revenues, and 1% in Portugal’s nightly hotel reservations. Turkey is an attractive destination that’s not part of the European Union.

However, with European gas prices at an all-time high and likely to increase globally, there is concern that the conflict in Greece will worsen already grim prospects, increasing provider costs and reducing guests’ purchasing power.

There is no end to the cost

Babbis Voulgaris from the Corfu hoteliers’ association said that even hotels closed during winter are worried about their ability to bear the additional burden. They had already agreed to prices with tour operators last year.

Diavatis, the resort owner, also has a year-round boutique Hotel and waterpark on the Island.

“This will become a serious crisis,” he stated. It’s not worse than the pandemic, but it is better. At least we are open to discussing. We didn’t lose any money back then. “Now we are heading in the opposite direction.”

Since 2020, the Greek government spent more than 42 billion euro in pandemic assistance measures to keep households and businesses afloat. It also invested about 2 billion euros between September and March to subsidize power bills. The support is not enough for hoteliers.

Costas Merianos owns and runs a family-run hotel along Corfu’s Ionian Coast.

Marina Lalli (president of Federturismo), said that many hotels across Italy have been forced to close due to lockdowns or high energy prices.

Lalli said that while she was optimistic about tourism reaching 2019 levels, Italy is a “mature destination with ageing hotel structures” and this could make it difficult for tourists to visit.

“Post-COVID tourists have become more conscious of quality. They expect a high standard of cleanliness, and they feel secure.

SOMETHING DIFFERENT

Greece stated that it will open its tourism season in March to satisfy the demand. But, as in Italy, Spain, Portugal and Portugal the season will not start in earnest before Easter, a crucial test for the summer months.

Italy and Greece are both racing to meet job shortages after the pandemic caused workers in other countries to move abroad in search of better jobs or sectors with more uncertain prospects.

The tourism minister in Greece even offered refugees fleeing Ukraine residence permits and work permits for 50,000 hospitality jobs.

According to Jose Luis Zoreda (Vice-President, Exceltur), Spanish tourism was very popular this year due to Spain’s high vaccination rate and the relaxation of the pandemic restrictions on its major markets, Germany and the UK.

Zoreda stated that there is “a strong, accumulated desire to travel in Europe”. She forecasted an “explosion of tourism” starting at Easter, with lower profits due to energy and inflation.

Exceltur found that tourists are also looking for a new experience. Campsite rentals rose 19.2% in 2021. Rural homes increased 16%. A decrease in business trips also led to hotel use falling by 8%.

According to the Spanish Association of the Caravanning Industry and Trade ASEICAR, January saw a 34.1% increase in motorhome and camper van sales.

According to Yescapa (an online rental agency for motorhomes, camper vans, and other vehicles), “The ‘all in one’ holiday model is dead,” Reuters was told by Yescapa.

Nico Aro is an Italian national who leases Tenerife’s camper van. Demands from Belgium, France, and Italy keep him away. Because they are so in demand, his biggest problem is not being able to find another.

He said, “I have been a beneficiary of the pandemic.”

Portugal is a country that has been increasingly interested in slow-growing tourism. This sector was crucial in the nation’s recovery after the debt crisis of 2010. In 2019, tourism accounted for 15% of the GDP, but it fell to 8% by 2020.

Helder Martins (president of Algarve’s principal hotel association) said that there is an increase in people searching for areas with less people. I don’t think they’ll return to wanting sun and beach. 

After being abandoned by the Portuguese over the years, the centuries-old “schist village”, made from stone in a mountainous area and adorned with pine trees, is roaring back to its former glory.

Sonia Cortes said that “this summer is filling up quickly.” She owns a five-room small hotel in Janeiro de Cima, a village where traditional homes are being rebuilt.

She said that the beginning of pandemics was very difficult for people who relied on tourism. “But then those living in big cities searched for safe villages, such as this one.

Bruno Ramos from a tourism agency in Switzerland said that there was an increase of 30% in night stay at schist village hotels between 2019 and 2020-21.

However, Merianos in Corfu, Greece is a much more realistic view of the coming months.

He said, “I will be content if, at the end of this season, I don’t owe any staff, the state, or the energy provider – even if 10 euro is left in my pocket,”

 

 

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